June 26, 2015

Abatement Advisory Board Declines to Catch a Falling Star

It’s been a bad few days for the Kansas City Star. Last week, the Kansas City Business Journal reported that the Star was seeking a 15-year extension to the abatement it has on its downtown production facility, which ended last year. If approved, the extension would be worth millions of dollars for the newspaper.

But prospects for the Star‘s extension dimmed a bit on Wednesday when the city’s Chapter 353 Advisory Board, in unexpectedly harsh terms, recommended the city deny the newspaper’s request.

Advisory Board Chairman Michael Duffy made the motion to recommend denial, giving two primary reasons. For one, Duffy said, Chapter 353 abatements were intended to be used as redevelopment incentives, “not as a bailout provision for a troubled business.” In addition, Duffy said, the Star‘s request appears to be “an end run around an adverse county determination of fair market valuation.”

According to the Business Journal, without the abatement the Star‘s property taxes could accelerate from less than $100,000 each year to around $1.3 million annually. That’s a hefty chunk of change to be sure, but remember: It’s a chunk of change that the newspaper hasn’t had to pay for the last decade. Put another way, the Star‘s present abatement meant millions of dollars did not go to public services in Kansas City; denial of this extension would allow the newspaper to fully fund its obligations to the city’s schools going forward.

Chairman Duffy’s suggestion that an abatement shouldn’t be a “bailout provision for a troubled business” is exactly right. If an enterprise cannot make it on the strength of the value it brings to the market, it is not the obligation of taxpayers to make it profitable. If the government is the only thing that can make a business work, then the business isn’t working (*cough cough* convention hotels *cough*).

But this week’s news is unlikely to be the end of the Star‘s abatement story. We’ll keep you posted.


June 25, 2015

Supreme Court Rules Against King v. Burwell Plaintiffs

Today, the U.S. Supreme Court ruled that federal subsidies may continue to flow to insurance plans sold in federal insurance exchanges, despite what the text of the Affordable Care Act might suggest. Readers can find the Court’s ruling here and further background on the case here.

The Court’s decision is a disappointment not only to supporters of genuine reform to America’s health care system, but also to the millions of Americans who will now be fully exposed to Obamacare’s mandate and penalty provisions—including hundreds of thousands of Missourians. More to come; stay tuned.

June 10, 2015

Are Work Requirements and Premiums On the Horizon for Medicaid’s Able-Bodied?

Two years ago, I wrote about a variety of ways Missouri could reform its Medicaid program. From health savings accounts to regulatory reform, the paper presents a wide-ranging and integrated proposal for delivering better care to Missouri’s neediest patients at a better price for taxpayers. Could other reforms poke through too? Absolutely, and two of the more prominent alternatives right now have to do with work requirements and premiums.

492The question of the cost of Medicaid in the years ahead is perhaps the biggest problem that work requirements and premiums address. The Department of Health and Human Services (HHS) forecasted in 2013 that the cost of Medicaid will continue to exceed the rate of inflation for at least the next decade because both the cost of services and the number of beneficiaries are rising. On that trajectory, the total cost of the program is set to nearly double to approximately $900 billion in spending annually by 2022, from about $450 billion in 2013.

Access for our most vulnerable is already being squeezed by today’s program, and this upward trend in spending—in contradiction, of course, to the “cost curve bending” claims about Obamacare by its supporters—does not bode well for the sustainability of the Medicaid status quo in the years ahead. Something will have to change to mitigate these spending pressures.

In this context, it’s very possible that work requirements and premiums for at least some able-bodied Medicaid beneficiaries could become the norm in some states. On the one hand, a work requirement for the able-bodied would ensure that a beneficiary would have a stream of income to help support themselves and supplement their welfare benefits; on the other hand, a modest premium would not only give beneficiaries a stake in their care, but also a reduced benefit cliff as their economic prospects improve. Different proposals have set different thresholds for work and premiums, but the underlying idea is pretty simple—if you can help pay for your care, you should, and because you are, you’re also helping to ensure that care for the most vulnerable is more available and more fully funded.

Unfortunately, state Medicaid plans that include robust work and premium requirements have a tendency of being rejected or gutted by the HHS right now. Whether the HHS continues to do so is an open question; the department may view these reforms as unnecessary right now, but as Medicaid spending spikes in the years ahead, robust work and premium changes at the state level may look better and better as a way of ensuring the poorest have access to care. They’re certainly ideas worth considering—and considering sooner rather than later.

June 9, 2015

White House Report Is the Same Tired Medicaid Message, but Newly Packaged

Last week the White House released a report titled, “Missed Opportunities: The Consequences of State Decisions Not to Expand Medicaid.” As you might expect with a political document, the White House’s paper was released to coincide with contemporary political events—specifically, a legislative debate over Medicaid expansion in Florida, whose circumstances I’ve discussed on this blog before. Florida’s House ultimately rejected the expansion proposal. That was the right decision.

Unfortunately, there isn’t much new in the report. As expected, the authors conflate Medicaid “coverage” and medical care, when the concepts are very different things, and they gloss over the fact that throwing more beneficiaries into the Medicaid program will actually make care delivery to the most vulnerable even more difficult.

Show-Me Daily readers may not be surprised, then, that my reaction, printed in the St. Louis Post-Dispatch, was not exactly high on the report’s contents.

But opponents say such studies and data miss the mark when evaluating whether states should expand Medicaid eligibility. Patrick Ishmael, a researcher at the conservative Show-Me Institute, said the current program is “deeply broken” and that adding more people to it would be irresponsible and immoral.

Medicaid beneficiaries and Missouri taxpayers deserve a better program, not these tired talking points, and there are many reforms out there that deserve to be debated.

But that debate is not helped along by reports like this from the White House. Expansion is not reform; coverage is not care. Until the White House and Obamacare supporters in general take those facts to heart, fixing Medicaid in any sort of meaningful way will continue to be very, very difficult in the near term.

May 11, 2015

Lambert Officials Admit: Market for Cargo “Disappeared” Post-Aerotropolis


Four years ago, the Show-Me Institute came out strongly against plans to spend upwards of a half-billion dollars to turn Lambert-St. Louis International Airport into an “Aerotropolis.” The plan revolved around the idea that Chinese cargo shipped through Saint Louis could be profitable—but only if the government subsidized it to the hilt. As our readers know, the project died not once but twice that year, and has died each year it has been introduced since.

It’s a good thing it kept dying too, as a story from the St. Louis Post-Dispatch showed last week.

In September 2011, a China Cargo flight carrying 80 tons of manufactured products landed at Lambert and was greeted by dignitaries from across the region. But airport officials said that market disappeared amid a downturn in international cargo. [Emphasis mine]

Imagine if Missouri had committed to the Aerotropolis project and then, poof, the market “disappeared”—which of course assumes it was ever really there. Taxpayers would have been left holding the bag.

The admission about Aerotropolis was part of a larger article about a lease just signed for a new “Mexico Hub” at Lambert, a story my colleague Joe Miller has already detailed. Lambert’s director, Rhonda Hamm-Niebruegge, says that the airport “is not paying a penny” for the new project, and if true, it’s a very good thing. At a time when its passenger traffic is down, the last thing Lambert should be doing is speculating on real estate, especially given its track record.

However, it’s not clear whether the Mexico Hub developer will try to draw on existing government subsidy programs to advance the project. An airport project at Lambert fully financed by the private sector seems very good; the concern is whether this project is too good to be true. One would hope that state and local officials would be chastened after the Aerotropolis debacle if they’re considering handing out tax incentives, whatever their scale.

I certainly hope the Mexico Hub project can move ahead on its own merits and without taxpayer money. Cargo markets have “disappeared” before, and taxpayers shouldn’t be on the hook if history repeats itself. We’ll keep you posted.

May 7, 2015

Is Ballparks of the Ozarks Swinging for the Tax Incentive Fences?

Few would dispute that Missouri is obsessed with baseball. From the Major Leagues to the Negro Leagues, the Show-Me State has a long reputation for hosting some of the best baseball teams and talents the country has ever known. It isn’t surprising, then, to hear that a group of Saint Louis-based investors think there’s a market for a baseball-themed resort in Missouri, or that those investors just broke ground for it in the Lake of the Ozarks, Missouri’s resort capital.

baseballAccording to Ballparks of the Ozarks COO Bob Ramsey,

[the investors] didn’t want chain link fences [for their baseball development.] We didn’t want dusty, aluminum bleachers, with mom and kids baking in the sun and everybody complaining.

What did we want? We wanted [a] destination. We wanted amenities.

Our fields as constructed will be state-of-the-art. What will push our ballparks beyond what competitors have to offer will be our amenities. Families and teams from across the nation will be drawn to the “America’s Baseball Resort” experience.

As a former little leaguer, I’m actually pretty fond of chain-link fences, dusty fields, and aluminum bleachers, but we all know that resorts are supposed to be glitzy and glamorous. If given the choice between little league and big league amenities, developers will understandably pursue the big league amenities.

Folks may not know that to get those big league amenities, this proposed baseball-themed complex may be swinging for the fences to get financial assistance from the government. Novogradac, a national accounting firm that among other things helps “prepare tax credit applications,” hosts on its website what appears to be a New Markets tax credit allocation request for Ballparks of the Ozarks. New Markets tax credits are intended to

foster the construction and rehabilitation of real estate and the expansion of operating businesses in order to create jobs, generate economic activity and improve the quality of services in low-income communities and to low-income persons.

Unsurprisingly given those requirements, the request specifically says that the resort will “support existing ‘lake’ area businesses which struggle during off peak seasons” and will provide “opportunities for low-income, minority and disadvantaged youth to utilize high quality athletic facilities through affiliated organizations.”

In other words, to help the poor, the project summary suggests that the government should help pay for a baseball resort—and indeed, quite a lot of it. Novogradac’s page suggests Ballparks of the Ozarks is seeking to have $14 million in tax credits allocated to the project, and not only that, the summary implies that but-for the federal money, the project might not go forward.

How that jibes with the project’s recent “groundbreaking,” I don’t know.

I wish the developers of Ballparks of the Ozarks the best of luck, but there may be cause for concern from the perspective of sound public policy. If a resort can’t make it on private funds alone, taxpayers shouldn’t have to cover the gap.

May 6, 2015

Passed: Direct Care Bill Moves On to the Governor

On Tuesday, the Missouri Senate passed HB 769, which protects medical retainer agreements, or “direct care,” from undue regulatory interference from the state’s Department of Insurance. We’ve talked about the importance of the direct care issue before and highlighted HB 769′s progress. Its passage is a win for Missouri patients.

Removing barriers to care should be a priority over simply guaranteeing Americans “coverage,” which is the focus of Obamacare. The problem with prioritizing mere coverage over actual care is that in many cases being “covered” only provides the illusion of protection, like many Medicaid beneficiaries have found, and not much else.

If the doctor won’t see me, what good is any “coverage” I might have?

That’s where direct care agreements come in. Here, the care is contracted directly with a doctor, cutting out the middleman insurer whose networks may not actually fit my care needs. Can health insurance supplement direct care arrangements? Sure, but the arrangement itself is not insurance. And that’s what HB 769 reaffirms—that direct pay arrangements are care, not just coverage.

Kudos to the general assembly.

May 5, 2015

Obamacare Expanders’ Emergency Room Claims: Still False


Supporters of the Affordable Care Act’s Medicaid expansion have claimed for many years that implementing Obamacare would reduce emergency room visits. In a press release distributed on New Year’s Eve 2013, Missouri Gov. Jay Nixon suggested that by expanding Medicaid fewer people would show up to emergency rooms.

Tomorrow, businesses in these states [that expand Medicaid] will have a significant competitive advantage—because as more people get health coverage, fewer people show up in emergency rooms, putting downward pressure on private health premiums. [Emphasis mine]

We’ve noted before that this isn’t true, and news released yesterday from the American College of Emergency Physicians confirms this yet again.

A survey of 2,098 emergency-room doctors conducted in March showed about three-quarters said visits had risen since January 2014. That was a significant uptick from a year earlier, when less than half of doctors surveyed reported an increase. The survey by the American College of Emergency Physicians is scheduled to be published Monday.

Medicaid recipients newly insured under the health law are struggling to get appointments or find doctors who will accept their coverage, and consequently wind up in the ER, ACEP said. Volume might also be increasing due to hospital and emergency-department closures—a long-standing trend.

“There was a grand theory the law would reduce ER visits,” said Dr. Howard Mell, a spokesman for ACEP. “Well, guess what, it hasn’t happened. Visits are going up despite the ACA, and in a lot of cases because of it.” [Emphasis mine]

Obamacare didn’t fix what was wrong with Medicaid. It simply doubled-down on a broken status quo—adding beneficiaries to a limited and narrowing network better known for its terrible health outcomes and dysfunction than for its care. If we want to make health care for the neediest in this state better, then we have to actually reform the current Medicaid program, not repackage Obamacare’s expansion and overlay it onto actual reform proposals.

Missouri needs Medicaid reform, both for beneficiaries and for taxpayers. Expanding Obamacare doesn’t get us there.

April 23, 2015

Health Care Bills On the Move from the House to the Senate

We’re approaching the end of the session, and it’s worth highlighting a few health care-related bills that are winding through the Missouri General Assembly.

  • HB 769 makes “medical retainer agreements” exempt from regulation by the state’s Department of Insurance. MRAs are direct-pay arrangements—where a patient and a doctor contract directly for care. Such contracts are not a matter of insurance, but in other states there have been pushes to regulate them under the “insurance” umbrella. HB 769 would preempt such a move.
  • HB 985 enhances Missouri’s Medicaid eligibility verification system by leveraging the resources of a third party. Over the past year MO HealthNet has been hit by a series of embarrassing reports of waste and mismanagement. Suffice it to say, money wasted is money that cannot go to the poor beneficiaries who need it most. HB 985 tries to tackle the problem of waste on the enrollment side by trying to make sure those limited dollars flow to beneficiaries who, in fact, qualify for them.
  • HB 319 expands on an existing state law dealing with MO HealthNet telemonitoring services, also known as telemedicine. Telemedicine allows medical professionals to diagnose medical problems remotely, which for people in medically underserved communities is a great technological innovation and benefit. Section 208.670.1 of current law already allows for reimbursements for telehealth “in the same way as reimbursement for in-person contacts”; HB 319 pushes MO HealthNet to further adopt and advance telemedicine practices.

April 17, 2015

What Does It Mean to “Have Health Care”?

This question has come into sharp focus just five years after the Affordable Care Act’s (ACA) passage. Does it mean having insurance? Or does it mean having accessible, affordable, and fundamentally personal care?

These may sound like philosophical questions, but the answers have very real consequences, as this story in the New York Times shows.

Alison Chavez, 36, who is self-employed, signed up for a marketplace plan in October 2013 that she hoped would be an improvement on her previous plan. She had recently been given a diagnosis of breast cancer and was just beginning therapy, so she was careful to choose a policy on the Covered California marketplace that included her physicians.

But in March, while in the middle of treatment, she was notified that several of her doctors and the hospital were leaving the plan’s network. She was forced to postpone a surgery as she scrambled to buy a new commercial policy that included her doctors. “I’ve been through hell and back, but I came out alive and kicking (just broke),” she wrote in an email.

Obamacare tries to treat the symptoms of a sick American health care system—the rising cost of insurance—but it doesn’t really treat the underlying sickness, the rising cost of care. And that’s ultimately what we expect when we “have health care”: care. It’s just not necessarily what people receive under the ACA.

In that context, it’s understandable that many Americans are looking for alternative care models that meet their needs, not the needs of a government bureaucrat. The “direct care” model is one of the most promising. The direct care model is simple; for a set fee, patients and doctors can contract for health care services. These care “subscriptions” guarantee access to a doctor of the patient’s choosing, oftentimes because the doctor is limiting the number of total patients he or she will take over that period. Instead of paying for insurance and getting poor care or no care at all, patients pay for care and receive . . . care. Imagine that.

An article published in Time Magazine late last year sums up what makes direct care arrangements attractive.

The driving insight here is that primary care and specialized care have two very different missions. Americans need more of the first so they’ll need less of the second. And each requires a different business model. Primary care should be paid for directly, because that’s the easiest and most efficient way to purchase a service that everyone should be buying and using. By contrast, specialty care and hospitalizations—which would be covered by traditional insurance–are expenses we all prefer to avoid. Car insurance doesn’t cover oil changes, and homeowners’ insurance doesn’t cover house paint. So why should insurance pay for your annual checkup or your kid’s strep swab? [Emphasis mine]

You can think of it as “a la carte care” or “concierge care,” or something else, but it is indisputably care—care that the patient has chosen and can actually access. The potential for direct care extends even to more specialized care, too. At the Surgery Center of Oklahoma (SCO), the surgeons post the prices of their services online, with prices oftentimes a fraction of what other hospitals and insurance companies charge patients. This 2012 video from Reason TV explains the lower-cost, and arguably more personal, SCO model.

It is no wonder several proposals now floating around the Missouri Legislature aim not only to protect direct care arrangements, but also to facilitate them. One proposal would insulate direct care arrangements from undue bureaucratic interference; another would initiate a pilot program to make direct care available to the poor. Both are well worth the consideration of Missouri legislators, especially before the legislature’s session comes to a close next month.

Direct care has the potential to help patients like Alison find and keep the doctors they want—and not have that relationship jeopardized by some middleman insurance relationship. Amidst all the problems of America’s post-Obamacare medical system, direct care represents a bright shining possibility for a better model for our health care: one that puts the patient first, not the government.

April 16, 2015

Tax Foundation: Missouri’s Sales Taxes Still Well Above Average

Last year, I wrote in Forbes about whether Missouri is a “low tax state.” (It isn’t.) I explored how Missouri compared to other states on a variety of taxes. At the time, by the Tax Foundation’s metrics, Missouri’s combined state and local sales taxes ranked 14th highest in the country.

This finding probably surprised a few Missourians, but it shouldn’t. Missouri’s state sales tax may be relatively low at 4.225 percent, but locally imposed sales taxes nearly double the average sales tax paid in Missouri stores. This includes extra sales taxes in special taxing districts like Kansas City’s Power & Light District, which can pump the sales taxes actually paid by consumers to well over 10 percent. These sales taxes are, of course, in addition to the state’s income and property taxes, which aren’t exactly low either. This is why Missouri isn’t a “low tax state.”

The Tax Foundation released its 2015 sales tax rankings, and . . . well . . . Missouri still ranks 14th at a rate of 7.81 percent, well ahead of 29th-ranked Florida (6.65 percent), which, of course, doesn’t have an income tax. The Tax Foundation’s report makes special mention of the failure of Missouri’s transportation sales tax last year, which would have added another three-quarters of a percent to the state’s already-high sales tax. Had Amendment 7 passed and bumped the state’s average sales tax to over 8.5 percent, chances are very good that Missouri would have jumped into the top 10 of high sales tax states, ahead of states like California (8.44 percent) and New York (8.48 percent). Missouri’s sales taxes are already bad; this year it is cold comfort to know that they could have been worse.

Missouri needs substantive, across-the-board tax relief. There’s still time for the legislature to act this year—at least on the income tax—but the clock is ticking.

April 14, 2015

The 27th State: Missouri’s Place in “Rich States, Poor States”

For folks in the free-market movement, the annual publication of Rich States, Poor States (RSPS) in many ways marks time. The book is part almanac and part analysis; it explores the minutia of state economic policies nationwide, highlights ongoing state economic successes or failures, and assesses the prospects of states succeeding economically in the future.

rich-states-poor-states-2015-edition-1-638It always makes for interesting reading, and this year’s edition (released last week) is no exception. Missouri’s economic performance has bounced along RSPS’s bottom quintile of states since its first edition, and unfortunately Missouri hasn’t made much progress since 2008; Missouri now ranks 42nd of 50 states in economic performance for 2015. That finding is consistent with economic assessments we’ve shared with readers in the past. Simply put, the state hasn’t made a lot of economic progress over the last decade relative to its peers.

Missouri is seeing movement in its “economic outlook”—but it’s all in the wrong direction. In 2012 Missouri ranked 7th for how bright its economic future appeared, which at the time I noted that the ranking looked a bit like an aberration. Only three years on, however, the state has dropped back to 27th overall. That is the worst Missouri has ever done in RSPS’s outlook ranking, dating all the way back to 2008 when the state ranked 25th. Suffice it to say, a weak economic track record paired with a mediocre economic outlook doesn’t inspire a lot of confidence in the status quo.

The fact is not a whole lot changed from 2013 to today, which is sort of the problem. States across the country are pursuing tax cuts and regulatory reforms in earnest, and yet Missouri has been slow to respond for years. Last year’s tax cut was an important first step toward turning the economic tide, but it is too small and being too slowly instituted to be a last step. Time is running out for the legislature to do much on the tax issue this year; it will be interesting to see if the body chooses to do nothing.

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